The review of policies and country performance is a core function of the OECD, whose aim is to help member countries improve their individual and collective performances in environmental management and sustainable development. We also review environmental performance of key non-Member countries. To date, we have completed reviews of Chile, China and Russia.

This report examines the results achieved by Hungary, with respect to both its domestic and international environmental commitments.

Angel Gurría and Hungarian President László Sólyom

It addresses the combined efforts of government and civil society (including industry, labour, households and environmental NGOs).

Our first environmental review of Hungary assessed the progress made between 1990 and 2000, a period marked by Hungary’s accession to the OECD (in 1996). Now it is very timely to release this second report, covering the period since 2000, after accession of Hungary to the EU and after more than 10 years of co-operation with OECD.

Since 2000, Hungary has experienced a high rate of economic growth – averaging 4% annually – as well as significant structural change and integration in the European and global economy. Imports and exports of goods now represent 78% of GDP. Fiscal consolidation and economic convergence with the rest of the OECD are high on the agenda. But what about environmental convergence?

Since 2000, Hungary has made significant environmental progress on several fronts. I will only refer to a few of them here:

Hungary has not only transposed the EU environmental legislation, but it has also improved its environmental planning and its enforcement activities; progressing towards the Polluter-Pays and User-Pays Principles, with increasing use of economic instruments. Hungary’s pollution abatement and control expenditure has reached 1.6% of GDP. Businesses and NGOs have contributed to address many environmental issues.

Hungary has considerably reduced air pollutants emissions and improved air quality. For instance, sulphur oxides and carbon dioxide emissions have been further decoupled from economic growth. Sulphur oxides emissions per unit of GDP in Hungary now stand below the OECD average, but are still above the Europe OECD average.

Nature protection has benefited from government action with the creation of the Natura 2000 network; but also from your personal attention, Mr. President. Nature and biodiversity are key assets for Hungary’s tourism industry and they bring crucial ecological services such as flood protection.

The report stresses that environmental democracy has progressed in Hungary with improved environmental information, environmental education, and environmental awareness. An innovative ombudsman's position has been established at the initiative of the Presidency, to protect the rights of future generations. This can be seen as a model for other countries.

In the energy sector, energy pricing has become “greener”, with regulated tariffs to consumers reflecting the cost of supply. For instance, in 2006 the gas subsidy was abolished and replaced by a direct income support scheme for poor households. This makes sense from the economic, energy and environmental points of view.

Hungary has developed a proactive stance in international environmental co-operation. It chairs the International Network of Basin Organisations and plays an important role in river basin and flood management, with 52% of its territory flood-prone.

Following the Baia Mare accident in Romania, which contaminated the Tisza and Danube Rivers in 2000 with toxic mining waste, Hungary played a pivotal role by ensuring public safety and communications in affected towns downstream; but also by leading the negotiations of the Protocol on Civil Liability under Europe’s Water and Industrial Accident Convention. Hungary launched in Budapest a sequence of international conferences on the environment-health interface. We also know, Mr. President, that you have initiated an innovative green network of Presidents.

These are all important achievements, but there is no space for complacency. Hungary still needs to address a number of environmental challenges, while pursuing sustainable development and balancing economic, environmental and social concerns. Meeting these challenges is achievable and affordable and should bring significant economic benefits. The report provides many recommendations. Let me mention a few:

Hungary faces a multiple challenge in water management; not only to satisfy the very demanding EU Water Framework Directive, but also to improve flood management, strengthen waste water treatment infrastructure and upgrade drinking water quality.

A number of health-related indicators are not favourable. Drinking water is still often contaminated by ammonium, arsenic (of geological origin), nitrates, fluoride and boron. This is despite costly programmes to open new drinking water sources, extend public water supply and improve purification technology which have only reached 10% of the target population under the Drinking Water Quality Improvement Programme. Improving air and drinking water quality should bring well-being to its people, as well as economic benefits such as reduced health expenditure and improved labour productivity.

Hungary’s energy and transport policies need to better integrate environmental concerns. For example, by addressing demand management. The country must further improve efficiency in energy and materials use. In doing so, it could capture multiple benefits, such as reducing dependency on imported energy, cutting CO2 emissions, reducing air pollution and related health costs and being prepared to respond to more stringent green-house gas emission reduction goals by 2020.

Hungary should identify a set of priority measures to mitigate and adapt to climate change, and implement fully its National Climate Change Strategy. It also needs to adopt and implement its National Biodiversity Strategy and to strengthen the funding and human resources for nature protection.

We recommend establishing institutional arrangements to review the environmental effects of fiscal instruments, identify environmentally harmful subsidies and improve the use of economic instruments such as taxes, charges and emissions trading schemes.

Concluding

Mr. President, Minister, Ladies and Gentlemen:
Hungary has consolidated much of the environmental progress noted in the first review in 2000. Since then, it has made further and significant environmental progress as presented in this second review. Congratulations!

As the Hungarian economy converges with those of other EU and OECD economies, Hungary needs to match that with a commensurate environmental convergence. I am convinced that further environmental progress will reward Hungary with the economic benefits of innovations in environmental technologies and of improved health and productivity of its population.

Mr. President, Minister, let me thank you, and through you, the many talented and committed officials and experts from your country who have contributed to this review in a spirit of openness and transparency.
OECD will keep supporting your efforts to bring about a sustainable and long-term economic growth in this wonderful country.